US trustbusters outline a Faustian M&A bargain
NEW YORK, June 23 (Reuters Breakingviews) - Distraught dealmakers spent years bemoaning the merger-hostile playbook of U.S. trustbuster Lina Khan. Now, her successor at the Federal Trade Commission is giving them a glimmer of what they want - for a price. The agency's approval of a $14 billion tie-up between two advertising agencies comes with oddball, politically charged caveats. It's a fiendish trade-off that threatens to impose new costs.
The FTC on Monday blessed, with conditions, the union between Omnicom (OMC.N), opens new tab and its rival Interpublic (IPG.N), opens new tab. That the acquisition drew protracted scrutiny is not unusual: the combined company would top the industry with some $26 billion in expected revenue this year, according to analyst estimates from Visible Alpha.
Neither is it odd that regulators would demand some remedy to allay any concerns. What is unusual is the specific condition imposed here: that Omnicom, which buys and places advertising, cannot discriminate based on a publisher's political or ideological viewpoints. The facially neutral requirement comes after Republican mega-donor Elon Musk launched an antitrust lawsuit against the Global Alliance for Responsible Media, accusing it of organizing a boycott against his social media network, X. FTC Chairman Andrew Ferguson singled out GARM in a statement, opens new tab on the Omnicom deal, and refers to investigations launched by Republican officials into the industry.
Khan's FTC was unpredictable because her mandate was, effectively, to test and reshape decades-old legal dogma. That included blocking acquisitions not only over typical issues like market concentration, but also due to concerns including potential harms to workers, opens new tab. Deals that would have passed muster in the past were suddenly halted, even those as seemingly insignificant as Amazon.com's attempt to buy iRobot, maker of the Roomba vacuum robot, for $1.4 billion.
As when it signed off on a $35 billion software deal between Ansys and Synopsys in May, the FTC under President Trump has signaled that, while not engaging in a laissez-faire free-for-all, it is more open to conditional approvals such as asset sales that leave space for dealmakers to strike a bargain. The problem is that, where Ferguson has chosen to push the boundaries, it's in service of a politically charged topic, in an administration rife with them.
Perhaps the conditions in this case will turn out to be more messaging than material burden. Still, the risks of something worse are clear: just look at CBS owner Paramount, its $8.4 billion merger with Skydance Media in limbo as it tries to settle a Trump lawsuit against news show '60 Minutes.' The bargain struck may demand a hefty toll.
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